Setting up a software testing company from scratch

Hi All
I am thinking of possibility of building a team with Software testing professionals with following objectives.
-- Provide efficient testing solutions at a reasonable rate
-- Create job opportunities for the community
-- Build a team with members different countries.

What are the challenges to be faced as this is started?
What are the things to be done first ?
How to get the first business ?
How to find investors/partners ?
How to partner with already existing testing companies?

Replies to This Discussion

I am as I mentioned before building the test function from the ground up in my current company.

One key thing I would suggest doing in the first instance is createing your policies. Cover the types of testing you will do what services you offer (consultancy, test execution) when you get your customers be sure to set up service level agreements so that you and your customer both know what level of work and commitment you give them.

Other than those thing I cannot comment any further as most of my customers are internal.

On the challenges aspect, I would say that the policies were my biggest challenge although setting up a company ensuring you have premesis and the correct insurance to cover premesis and staff would be a challenge too.

The next challenge would be building a reputation for your company. if you get one customer who says your were execellent then the chances are the word will spread and your customer base will grow well.

I am certain however there are more knowledgable people in this club who would provide you better information.

I would be interested to see some other comments as I too have often thought about creating my own business

Janesh,
Fundamental challenge (and this needs to get done first) - What is the pain point you are trying to solve? I.e., is there a specific area of testing that you think you OR a team that you build could execute better (or is that type of testing not offered at all currently in the industry -- i.e., your innovation to the table)? This should be the fundamental reason why you would think of entering this space and competing with others. Other points like pricing, market size, cost etc. can then determine if the idea is feasible.

The other points you mention - creating job opps, build a global team etc. are not really business reasons.

Srihari is right. The biggest challenge is to win business, and there's no point starting to try and find clients till you know why they should use your firm. What is your specialism? What's your business and testing model? What are you giving clients that they can't get better or cheaper elsewhere? If you can't answer that there's no point starting.

It's going to be a challenge, you are entering a market that is quite mature and has a number of big players so you need to make sure that what you offer is sufficiently different or an improvement to what is currently on offer. There are lots of companies out there offering "efficient testing solutions at a reasonable rate" so think about why people should choose your company rather than another. If you can't think of reasons why then it's may not be that attractive to investors and partners; the "we're cheaper than everyone else" isn't really a solid foundation since there will always be companies willing to undercut you.

Finding business is always going to be difficult since the market is so competitive and without a track-record of successfully delivering projects, companies will see you as a risk (will they deliver? how good are they? how trustworthy are they?). Try to use your existing network of contacts and speak to them to see if they have any testing projects they need completing.

Think long and hard about who your target clients are, everyone is not an option! It is better to be focused on a few sectors (at least initially) than trying to satisfy all markets. It allows you to focus your message, build authority and is easier to maintain contact with prospective clients.

As for partnering with existing testing companies, try giving them a call and pitch your idea; however consider that most will receive a number of such calls/emails each month. Partnerships are about trust and before welcoming you with open arms and giving you work they will ask the same questions as potential clients (e.g. will they deliver? how good are they? how trustworthy are they? Are they better that XYZ? etc).

Given that you are planning to enter a mature market, I would advise you draw up a business plan with detailed financials to get an idea of the costs of running such a business. I’d be quite pessimistic about your sales when you drawing up your financials; one of the key failings in most business plans is they are too optimistic about their sales and so don’t correctly calculate the working capital needed to support the business until they break-even (and so end up failing).

You can also consider, is this something that you can work on alongside your existing career to minimise your risks; if you currently work for a testing company then your contract may prohibit this.

from my experience , working in a start up test consultancy....one of the stiffest challlange you could face is...

attracting and retaining testing talent ? Hiring and retaining the right people ( ready tool smiths or preferably people who are just good testers who can ramp upto anything quickly !)

before projecting your company/group to potential businesses how would you project it to potential partners / employees ? what is the usp/vision of your idea that sets it apart from the zillion test consultancies/consultants our there ?